Immune-mediated diseases of the CNS, such as multiple sclerosis and its animal model, experimental autoimmune encephalitis (EAE), are characterized by the activation of antigen-presenting cells and the infiltration of autoreactive lymphocytes within the CNS, leading to demyelination, axonal damage, and neurological deficits. Hepatocyte growth factor (HGF) is a pleiotropic factor known for both neuronal and oligodendrocytic protective properties. Here, we assess the effect of a selective overexpression of HGF by neurons in the CNS of C57BL/6 mice carrying an HGF transgene (HGF-Tg mice). EAE induced either by immunization with myelin oligodendrocyte glycoprotein peptide or by adoptive transfer of T cells was inhibited in HGF-Tg mice. Notably, the level of inflammatory cells infiltrating the CNS decreased, except for CD25+Foxp3+ regulatory T (Treg) cells, which increased. A strong T-helper cell type 2 cytokine bias was observed: IFN-γ and IL-12p70 decreased in the spinal cord of HGF-Tg mice, whereas IL-4 and IL-10 increased. Antigen-specific response assays showed that HGF is a potent immunomodulatory factor that inhibits dendritic cell (DC) function along with differentiation of IL-10–producing Treg cells, a decrease in IL-17–producing T cells, and down-regulation of surface markers of T-cell activation. These effects were reversed fully when DC were pretreated with anti-cMet (HGF receptor) antibodies. Our results suggest that, by combining both potentially neuroprotective and immunomodulatory effects, HGF is a promising candidate for the development of new treatments for immune-mediated demyelinating diseases associated with neurodegeneration such as multiple sclerosis.